Question : P, Q and R were partners in a firm sharing profits in 2:2:1 ratio.The Partnership Deed provided that on the death of a partner his executors will be entitled to the following:
(a) Interest on Capital @ 12% p.a.
(b) Interest on Drawings @ 18% p.a.
(c) Salary of Rs. 12,000 p.a.
(d) Share in the profit of the firm (up to the date of death) on the basis of previous year's profit.
P died on 31st May, 2020. His capital was Rs. 80,000 . He had withdrawn Rs. 15,000 and interest on his drawings was calculated as Rs. 1,200. Profit of the firm for the previous year ended 31st March, 2020 was Rs. 30,000.
Question:
Interest on Drawings is
Option 1: Rs 1,200
Option 2: Rs 1,800
Option 3: Rs 300
Option 4: None of the above
Correct Answer: Rs 1,200
Solution : Answer = Rs 1200
| P's capital a/c | |||
| By Drawings | 15,000 | By Bal b/d | 80,000 |
| By Int on drawings | 1,200 | By Profit & loss susp. a/c | 2,000 |
| By P's executor a/c (b/f) | 69,400 | ($30,000 \times \frac{2}{5} \times \frac{2}{12}$) | |
| By IOC | 1,600 | ||
| ($80000 \times \frac{12}{100} \times \frac{2}{12}$) | |||
| By Salary($12,000 \times \frac{2}{12}$) | 2,000 | ||
| 85,600 | 85,600 | ||
Hence, the correct option is 1.
